The 118km line, which includes 10 new stations and 42km of new tunnels through central London, was due to open in December 2018, but Crossrail announced in August 2018 that the project would not meet its deadline.
In December 2018, the Department for Transport (DfT) announced that cost escalation on the programme had resulted in an increase in funding to £17.6bn, £2.8bn more than the funding announced in 2010, including more than £2bn of loans from the government to Transport for London (TfL) and the Greater London Authority.
In April 2019, Crossrail Ltd announced that it plans to introduce services, excluding Bond Street station, on the central section of what will be known as the Elizabeth Line at some point between October 2020 and March 2021.
While the NAO says the report is not intended to apportion blame for what happened to the programme, the report outlines a series of mistakes and failings between 2015, when problems with the project first became apparent, and March this year.
One of the major issues raised by the report was the fixed completion date of December 2018, which the NAO says drove much of Crossrail Ltd’s decision making on the programme.
“Delivering by December 2018 meant multiple activities ran in parallel,” the report says.
“This approach meant that some work to install systems required to operate the railway, and complete stations, would take place at the same time during the latter stages of the programme. This created vulnerability on the critical path. The delivery approach, delays to some contracts and the decision to set and then stick to the December 2018 opening date, led to increased compression in the programme and increased risks.”
Costs on most of the 36 main contracts also increased substantially. Crossrail Ltd did not require individual contractors to manage interfaces with other contractors, and so protected contractors from changes that were outside their control.
“Therefore, Crossrail Ltd had to compensate individual contractors for delays that occurred on other contracts, on which their work depended, and had to engage in costly change control negotiations,” NOA says. “Changes to the design of construction and systems installation work, and changes to contractors’ delivery schedules, cost around £2.5bn between 2013 and 2018.”
Crossrail Ltd initially hired Bechtel and Transcend as project management partners to support it in managing the overall programme, including integrating the work of multiple contractors, but in 2011 decided to fold the Bechtel and Transcend teams into its own project management effort, rather than hold them at arm’s length and accountable for integration of the overall programme.
Aspirational plan
The lack of a detailed delivery plan was raised as an issue, as Crossrail Ltd didn’t begin to produce a detailed, realistic, bottom-up plan until late 2018. From 2015, it had based its management of the programme on an aspirational plan designed to improve progress by suppliers, rather than to provide a reality check on overall progress.
During 2015 and 2016, pressures on the programme began to show and continued to escalate through to the end of 2018. The NAO found three main points when costs escalated:
- From 2015, Crossrail Ltd renegotiated some of its main contracts, to settle historical compensation claims and address the delays that had emerged, by aligning contractors’ delivery milestones to its revised programme plan. By November 2016 Crossrail Ltd had drawn down substantial contingency and was forecasting that it would need to use contingency held by TfL, later in the programme.
- Soon after Crossrail Ltd revised the delivery plan in 2015, a number of key contracts were behind schedule again. To meet the December 2018 opening date, Crossrail Ltd accelerated work on key contracts, which increased costs.
- In the run up to and following Crossrail Ltd’s August 2018 announcement that it would not open the central section in December 2018, costs increased further because completing the programme depended on contractors’ workforces being required for longer than planned. Between March 2018 and December 2018, for example, the forecast final cost of the contract to install track and key systems in the tunnels increased by 25%, from £767m to £956m.
Between 2015 and 2019, there was little pressure on key contractors to deliver the programme efficiently, the NAO found. During 2015 and 2016, key contracts were moved from a target price to a cost reimbursement basis, which meant that Crossrail Ltd removed the key incentive on contractors to minimise costs and took on the financial risk itself.
“The frequent re-planning of the programme, combined with increasing interfaces between contracts, meant that contractors continued to raise compensation events, and costs continued to increase,” the NAO says. “After it had announced that it would not open the central section in December 2018, Crossrail Ltd began negotiating fixed price contracts for some of the remaining work to improve certainty about costs.”
Decisions made by Crossrail Ltd drove unnecessary cost into the programme. In early 2018, to account for delays to the schedule, Crossrail Ltd began carrying out train and signalling system testing and construction activity in alternating time periods, to allow for early identification of potential train and signalling system issues. However, delays to the software development meant that few meaningful results could be acquired at this point and took any spare time and space from construction workers on site.
Despite the findings, the NAO said the project needed to be completed.
“Crossrail is past the point of no return,” the auditor says. “Nearly £16bn has already been spent. In our view, there is no going back.
“Crossrail Ltd now needs space and time to complete and deliver its plans. In April 2019, Crossrail Ltd announced that it plans to introduce Elizabeth Line services on the central section between October 2020 and March 2021. While it has made progress with the development of a detailed and realistic plan, Crossrail Ltd has not yet completed its assessment of the financial implications of this opening schedule. It is still unclear when the full Elizabeth line service will start.”
The report issues three recommendations:
- Crossrail Ltd should continue to refine its plan to complete the programme, establish a realistic cost estimate, and resist external attempts to influence timetable and cost.
- Crossrail Ltd, working with sponsors, should establish a range of scenarios that set out the potential future impacts on the taxpayer, passengers and businesses and develop plans for how further cost increases or delays in collecting revenue will be financed.
- Crossrail Ltd should rebuild its capacity and capability to complete the programme in a timely and cost-effective way.
